Azrieli, Shikun U'Binui to build Rishon Lezion waste plant

The BOT mechanical biological treatment facility is designed to treat thousands of tons of home waste per year.

Shikun u'Binui Holdings Ltd. (TASE: SKBN), through its concessions division, and Azrieli Group Ltd. (TASE: AZRG), through its GES subsidiary, have won a build, operate, transfer (BOT) tender issued by the Ministry of Finance Accountant General department and the Ministry of Environmental Protection to design, construct, finance, and operate a facility for mechanical biological treatment (MBT) of municipal waste in the vicinity of Shafdan near Rishon Lezion.

The two companies reported that the Zero Waste special purpose vehicle, which Shikun & Binui and GES own in equal shares, was selected to build and operate the facility. Investment in the facility is likely to reach NIS 750 million, and the period of operation is 29 years.

The project is subject to completion of financial closure within 15 months. Zero Waste is to obtain the financing necessary for carrying out the project. Once this is completed, construction of the facility will take another 3.5 years (including the running in period).

The facility is designed to treat thousands of tons of home waste per year, and to help reduce the proportion of municipal waste assigned for burying. The facility's advanced technology will separate the results of recycling, such as metal, plastic, glass, and paper, while generating environmentally friendly electricity from natural gas and compost produced in biological processes from food leftovers and organic waste.

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The facility is based on technology from German company Strabag, which is the technological partner and know-how provider for the facility. Strabag, a global leader in the field and a holder of patents for advanced treatment of waste, has built dozens of plants of this type in European countries.

At present, 80% of the home waste generated in Israel is buried, mostly in special pits in the Negev. Buried waste, however, is liable to contaminate land and groundwater, which means that in Israel, like the rest of the world, there is a need for projects for separating and recycling industrial and home waste, while taking advantage of opportunities to produce electricity from organic waste.

Similar projects are slated for construction in Israel in the coming years in order to receive and treat quantities of home waste, and in order to meet the Ministry of Environmental Protection's targets, including a substantial reduction of waste burying over the coming decade.

Shikun & Binui's share price jumped 2% yesterday, while Azrieli Group's share was up slightly. Shikun & Binui's market cap is NIS 2.4 billion, follow a decline of nearly 30% over the past year, due among other things to an investigation into alleged bribery by company executives linked to the company's activity in Kenya.

Real estate group Azrieli has a NIS 20 billion market cap, following a 10% drop over the past year.

Shikun & Binui concessions CEO Allon Raveh said, "I invite the local authorities in the southern part of the Greater Tel Aviv area to join us as customers and lend a hand in the effort to decrease the amount of waste being buried. The project will put Israel in the same category as countries like Germany, the UK, and Spain, which have already successfully built and applied facilities of this type for treating the huge quantities of waste produced in large cities using innovative methods."